The USDA’s Economic Research Service second-quarter 2020 forecast for beef production was raised Thursday on recent slaughter data.
The monthly Livestock, Dairy, and Poultry Outlook said third- and fourth-quarter 2020 forecasts were raised on heavier carcass weights and a faster expected pace of slaughter.
The increase in slaughter and carcass weights elevated the annual beef production forecast to 26.9 billion pounds, the USDA said. Forecasts for fed steer prices in 2020 were lowered on recent price data and a large supply of fed cattle.
May’s beef imports fell 9% to 269 million pounds, but the forecasts for second- and third-quarter 2020 imports were revised up from a month ago on the demand for lean beef trimmings, the report said.
Beef exports in May totaled 188 million pounds, 31% below a year earlier, the ERS said. The second-quarter beef export forecast was revised down on lower exportable supplies.
However, the third-quarter beef export forecast was raised 20 million pounds from a month ago because of an expected availability of more exportable supplies, the report said.
Beef packing facilities continue to recover weekday slaughter capacity and have used Saturday as an opportunity to improve weekly totals, the report said.
Accordingly, estimated steer and heifer slaughter trails year-ago levels by almost 1%, while the slaughter of cows and bulls maintains levels that are slightly more than last year, the ERS said. Despite the lag in the number of steers and heifers slaughtered on a weekly basis, the proportion of fed cattle in the slaughter mix has rebounded.
LARGER HOG SUPPLIES TO PRESSURE PORK
Higher hog inventories reported in the June Quarterly Hogs and Pigs were expected to pressure hog prices in the second half of 2020, the USDA said. In the same report, hog producers signaled intentions to reduce sow farrowings, implying lower pork production in the first half of 2021.
Forecasts for US pork exports in 2020 and 2021 were raised in response to recent strong export data, the ERS said. 2020 exports were expected to be 19% greater than last year and about 2% more in 2021 than shipments this year.
The rebound of the US pork processing industry continued in June, as hog slaughter facilities stepped up operations after sustaining significant COVID-19-related slowdowns and temporary closures earlier in the spring, the USDA said. The industry’s low point in capacity utilization came on April 29 when only 53.9% of the industry’s capacity functioned.
Since then, utilization has climbed, albeit slowly, the report said. May’s capacity utilization averaged 72%, while in June it averaged 90.3%, with a high of 96.5% on June 29.
For the week ended July 10, industry capacity utilization was 93.8%.
CHICKEN PRODUCTION SEEN HIGHER
The broiler production forecast was increased on May data as well as recent hatchery data, while the price forecast was unchanged, the USDA said. The second-quarter export forecast was decreased on lower-than-expected May volumes.
CATTLE, BEEF RECAP
Fed cattle sold this week at $94 to $100 per cwt on a live basis, mostly $95 to $98, steady to up $3 from last week. Dressed-basis trading was reported at $157 to $160 per cwt, steady to up $2.
The USDA choice cutout Thursday was up $0.04 per cwt at $200.80, while select was down $0.07 at $191.30. The choice/select spread widened to $9.50 from $9.39 with 130 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Wednesday was $135.68 per cwt, down $0.23. This compares with Thursday’s Aug contract settlement of $142.60, up $3.17.